Tiger Global’s India exits top $2 billion in 18 months
Arc Notes
Arc Analysis
Tiger Global, the most aggressive backer of Indian startups, has exited from multiple portfolio companies that went public during the 2021 boom cycle.?
The cashouts follow months of market turbulence. The value of publicly traded companies in Tiger’s portfolio plummeted 56% in 2022 as tech stocks underwent a stunning correction after nearly two years of gains.
The damage forced the New York-based investment firm to also mark down the valuations of private companies.
All Is Not Lost?
Despite falling valuations, Tiger is making tidy returns from the exits. And it is already laying the groundwork for future bets: it is talking to limited partners, investors in alternative funds, to raise a new $6-billion fund with India as a key focus area.
Let’s quickly review Tiger’s high-profile exits.
Freshworks: Tiger sold off 25-26 million shares in the SaaS major between its IPO in September 2021 and April 2022. The Arc reviewed a disclosure that Nasdaq-listed Freshworks made for the same. During this period, the company’s share price swung between $18 and $54.?
This means the partial stake sale in Freshworks likely fetched Tiger returns in the range of $400 million and $1.3 billion, The Arc estimates. As of last year, it still held about 19% (which will be worth $800 million right now), down from 26% during the IPO.?
PB Fintech: Tiger sold half its holdings in Policybazaar’s parent entity before its IPO and the remaining in November 2022, when the one-year lock-up expired.?
It earned Rs 1,900 crore ($232 million), or 5X returns, from an investment of Rs 360 crore ($44 million) in PB Fintech, as per The Arc’s estimates.
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Delhivery: Tiger Global also offloaded a part of its stake in the logistics company before its IPO in 2022 and the remainder in market sales earlier this year. It pocketed about Rs 1,900 crore ($232 million), or 2.7X returns, on a total investment of Rs 709 crore ($86 million), as per The Arc’s calculations.
Flipkart: The cashout from the ecommerce giant will rank as Tiger Global’s biggest haul in its India portfolio. It is in the process of selling its remaining 4% stake to Flipkart’s parent, Walmart. The Arc understands that the paperwork is underway and the deal will likely be closed in a few months.
At Flipkart’s $32-billion valuation, Tiger’s 4% stake may be worth nearly $1.3 billion.
Tiger invested $1 billion in Flipkart from 2010 to 2015. Its previous cashouts — deals with SoftBank and Walmart in 2017 and 2018, respectively — totalled $3.7 billion.
Once the current sale with Walmart goes through, Tiger’s winnings from Flipkart may amount to $5 billion. It made the same amount from JD.com, its most successful bet in China.?
What Now?
Tiger is nowhere close to its normal pace of investments. However, it is still joining follow-on funding rounds in late-stage portfolio companies like payments unicorn PhonePe and early-stage ventures such as checkout player Shopflo and automation startup Groyyo.
Given the flux in China, it remains bullish about India, and people will be tracking how fast it closes its new fund.
“Because of lower returns historically, India entered this downturn in a better position than the US. I don’t think there was as much excess capital in India as there was in a few other places,” Scott Shleifer, the co-founder of Tiger’s private equity investing arm, said recently.
He added: “Market leaders (in India) are growing faster than their competitors in the US and China, and it is largely because penetration (of the internet is lower). Unit economics are improving. We have a lot of companies which make money.”
Written by Madhav Chanchani